How do we prevent chronic over-fundraising leading to a tragedy of the commons in donor recruitment? Ian MacQuillin believes the solution has bee around for the past 15 years.
Last year at a charity awards ceremony, I found myself engaged in conversation with an academic from one of the London universities. This conversation came about the way so many of my conversations with people outside the charity sector start: she wanted to tell me exactly why she disliked ‘chuggers’.
At some point in the discussion she told me that what was happening was a ‘tragedy of the commons’ situation and charities didn’t realise this or the damage that it was doing.
Well, many in the sector are completely au fait with what a tragedy of the commons is and have already expressed exactly the concerns she had (I was more than a little peeved at the slightly patronizing attitude that assumes that if it’s an intellectual idea from a domain outside of philanthropy, then no-one inside philanthropy will have the first idea what it’s about).
What is a tragedy of the commons?
The tragedy of the commons describes what happens when users of a common resource – such as grazing land, a forest or a fishery – can’t resist or stop themselves from overusing that resource with the result that it is irreparably depleted.
It was proposed by ecologist Garrett Hardin in a paper in the renowned journal Science in 1968. The example Hardin used to develop his idea was that of a group of herdsmen grazing sheep on common land. It makes sense for each herdsman to add another sheep because he benefits at the expense of the other herders. But being rational, all the other herdsmen have the same idea and soon you can’t move for sheep and the common grazing land is destroyed forever. It’s very closely related to the game theory concept of the ‘prisoner’s dilemma’. (For a quick explanation of the tragedy of the commons, check out this video, and this video for the prisoner’s dilemma.)
(Hardin’s is strange paper to read at best part of 50 years remove. Even though he used an environmental resource to develop his idea – and that’s how it is most regularly applied – it’s actually an argument in favour of enforced population control and contains a section sub-headlined ‘Freedom to breed is intolerable’.)
So the argument as applied to fundraising is that donors are just such a common resource and that fundraisers are depleting this resource by continually overusing it. Although he didn’t use the term, it was precisely the concept of the tragedy of the commons that Sir Stuart Etherington was invoking when he said that fundraisers were “overfishing the waters”, right down to the environmental resource analogy.
Is it true, as the London academic thought, that charities are totally unfamiliar with the concept of the tragedy of the commons?
Absolutely not.
Mark Philips of creative agency and Rogare associate member Bluefrog wrote on his Queer Ideas blog in 2011 about a tragedy of the fundraising commons and reiterated those ideas in a session at the IoF National Convention this year called ‘What’s wrong with fundraising?’. Philips’s use of the tragedy of the commons was referenced by NCVO this year in a blog following the suicide of Olive Cooke. Charity web designer and copywriter Ben Blankey employed the concept in a blog about two-step SMS fundraising last year.
Nor is it that case that fundraisers have only recently realised that the tragedy of the commons has an application to fundraising.
In an article in Professional Fundraising in 2001 (‘The Ethical Dimension’, October 2001 – one of the very first articles that I commissioned as the magazine’s new editor), Joe Saxton used the concept to describe how the fundraising profession is good at “over-exploiting and burning out new fundraising techniques, so that they no longer work or more usually they just get a rather negative image in the eyes of the public”.
Invoking classic tragedy of the commons reasoning, Saxton pointed out:
“It is always worth any individual charity taking up a new technique because it will probably work for them…however, the net effect of a plethora of charities taking up the technique is that it becomes over-used and loses its impact much more quickly…The ethical dilemma for any charity is that while it may realise that a technique is being over-exploited, it gains nothing by not using it, and everything by doing so.”
Saxton argued in 2001 that the solution lay with sector bodies and a “broader regulatory environment”.
And it was, indeed, a determination to prevent a tragedy of the commons arising in street fundraising that led to the formation of the Public Fundraising Regulatory Association (PFRA) in 2000, as is made clear in an article in Professional Fundraising written by then PFRA-board members Matt Sherrington and Anne Bolitho – e.g. “we were overgrazing our pastures, particularly in London” (‘The Common Good’, March 2002, not archived online).
How do we avert a tragedy of the commons?
Traditional economic responses to a tragedy of the commons situation have been to either privatize the resource or to impose top-down regulation (i.e. government regulation).
However, there is a third solution. In 2009, American political economist Elinor Ostrom was awarded the Nobel prize in economics in recognition of her work in demonstrating that what she termed ‘common pool resources’ (CPR) could be successfully managed by the people who had access to the resource – a rebuttal of the tragedy of the commons idea. In other words – self-regulation. Ostrom outlined her ideas in a book in 1990 – Governing the Commons: The Evolution of Institutions for Collective Action; and it’s worth also checking out this more recent paper.
Ostrom showed that groups that successfully managed their own resources were characterized by eight ‘design principles’. These were:
- Clear boundaries – between what is and is not the shared resource and clear boundaries also between legitimate and non-legitimate users of the resource.
- Proportional equivalence between benefits and costs – so that members of the group have to negotiate for their benefits and higher levels of benefits must be earned.
- Collective choice arrangements – shared users of the resource make their own rules about who can use it and how and when they can use it.
- Monitoring – members of the group regularly monitor the condition of the resource and how other members are using it.
- Graduated sanctions – there is a system of sanctions in place for transgressions of the group’s rules, but they start low and become stronger for repeated breaches.
- Conflict resolution mechanisms – there are “arenas” and mechanisms for resolving conflict quickly and at low cost.
- Minimal recognition of rights – the rights of users of the resource to make their own rules are recognised by government.
- ‘Nested enterprise’ – when groups and the resources they use are part of larger systems, there must be appropriate co-ordination and governance between them – this is called polycentric governance and it means that one single organisation does not need to maintain total authority, but governance can be distributed throughout the various groups in appropriate “nested organisational layers”.
PFRA – a model of an institution for ‘collective action’
Since 2000 fundraising has possessed such an ‘institution for collective action’, which has employed many of these design principles in its ongoing efforts to avert a tragedy of the commons in one particular domain of fundraising. The domain is street fundraising and the institution is the PFRA:
- The PFRA identifies legitimate (members) and non-legitimate users of the resource.
- Costs and benefits are proportionate: the more a charity successfully uses the resource, the more it has to pay for having done so.
- It has collective choice agreements in that members establish and administer the allocations systems that decide which members can fundraisers where and when.
- PFRA monitors the activities of its members…
- …and imposes graduated sanctions (financial penalties are not imposed until rule breaches reach a specified threshold).
- There are conflict resolution systems for resolving diary clashes.
- And it’s also part of a polycentric governance system with responsibilities and duties outlined in agreements with the Institute of Fundraising and Fundraising Standards Board.
Perhaps the recognition of PFRA’s right to make rules exists only be default because there is no legislation covering street fundraising. But recognised it certainly is, for instance by the likes of the Local Government Association.
By and large the PFRA appears to exemplify the eight design principles that Ostrom identified as characteristic of successful self-regulation of a common pool resource. And it is the only institution involved in charity fundraising in the UK that has ever come close to doing so.
‘The PFRA experience shows that charities can work together to avert a tragedy of the commons. Instead of imposing top down regulation, the solution is to let charities and agencies get together to manage the resource for themselves and set their own rules.’
It’s ironic then, isn’t it, that it’s the PFRA that appears to be most vulnerable in proposed reforms of charity self-regulation, with calls for it to be subsumed within either the IoF or the FRSB because having tripartite regulation of fundraising is ‘confusing’?
Also ironically, halfway through writing this blog, the PFRA announced that what it did was no longer regulating and dropped the word ‘regulatory’ from its name, to be known henceforth as the Public Fundraising Association, though still with the initials PFRA.
That notwithstanding, from its formation in 2000 until 31 August 2015, PFRA provided the kind of self-regulation that ought to now be held up as a beacon for current consultations on reforming the system.
The PFRA experience shows that charities can work together to avert a tragedy of the commons. The learning here is that instead of imposing top down regulation by setting, say, an upper limit on the number of times charities may contact donors, or how many times a donor may be asked on the telephone, the solution is to let charities and agencies get together to manage the resource for themselves and set their own rules.
The PFRA experience also demonstrates that polycentric governance works in fundraising. Many professions have separate bodies to set the code of conduct and enforce the code of conduct. This is how it works in advertising for instance with the Committee of Advertising Practice setting the codes and the Advertising Standards Authority enforcing them. No one thinks that’s ‘confusing’.
We have a similar arrangement in fundraising with the IoF setting the code and the FRSB enforcing it. That’s a direct analogue of what happens in the advertising industry so presumably anyone who understands that won’t find the fundraising analogue confusing either. But throw the PFRA into the mix of polycentric governance and fundraising self-reg becomes as complicated as – to quote Basil Fawlty – a proposition from Wittgentstein.
However it’s really quite simple: IoF writes the code; FRSB enforces the code; PFRA averts a tragedy of the commons by successfully managing the common pool resource of potential donors on the street.
In this polycentric system, you could plug in any new institution to do similar. If challenge eventers are running riot over the national parks, then bring charities together and let them sort out among themselves how to manage that common pool resource of access to the countryside by establishing a group that adheres to Ostrom’s eight design principles (something like this does exist for the Three Peaks). If people think telephone fundraising is too intrusive, bring charities together to do likewise to manage the common pool resource of donors who are accessible via the telephone.
We’ve had a potential solution to the current regulatory questions for the past 15 years. In the reforms that are coming, let’s make sure we don’t throw the baby out with the bathwater.
- Ian MacQuillin is director of Rogare – The Fundraising Think Tank.
Critical Fundraising 
First, may I emphasise that by looking at “tragedy of the commons”, we are not treating or speaking of our donors as if they are “resources” – our donors bring resources to our NFP missions. The “resource” is the entitlement to communicate in the public domain to our potential audience, without special additional regulation.
In addition to Ostrom’s eight pre-conditions for successful self-regulation, there’s one more important idea which is relevant, from the application of “tragedy of the commons” theory applied to biological systems (plants, animals). Indigenous and pre-industrial societies did and in some places still do have culture as an important element in self-regulation.
The process is something like this: by observation, people learned over generations what were the indicators of over-use, and they derived working rules for access to resources (the rules might have been clan or gender-based entitlements, or territorial, or seasonal, or based on observed populations). Those rules were, and some are still, enforced partly by cultural norms – such as respect for the ecosystems or the plant and animal species, and for a sense of responsibility for the rules.
This reminds us that the self-regulation of fundraising does need to be backed by a culture of respect for donors and sense of responsibility for how fundraising operates. This can be seen in the broad principles in (for example) the International Statement of Ethical Principles in Fundraising and national Codes of Ethics. I’m pleased to say it’s evident in Australia’s newly established PFRA http://www.pfra.org.au/
Obviously not all the theoretical assumptions in the economic theory translate across to our situation. In particular, tragedy of the commons (I think) assumes a priori that the humans in the situation can’t actively bring more resources into the system – they can only influence the ecology via their influence on some of the population dynamics of the plants and animals (e.g. total local populations, territorial density, food availability and number of reproductive aged individuals in the case of animals).
In the case of fundraising, happily, there’s plenty we can do to draw more people into the joy of giving – not just through the valuable direct marketing methods which cause contention.
Returning to the origin of tragedy of the commons theory, for those interested, the UN has this year embarked on the huge task of creating a High Seas Biodiversity Agreement, under the UN Convention on the Law of the Sea. High seas fisheries are effectively unregulated at present, although there are species-specific agreements. Property rights, international regulation, and self-regulation will all be part of the debate. A large NGO coalition is working on this issue http://highseasalliance.org
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I agree totally Roewen – donors are not a resource that needs to be managed, nor is their charitable giving. The resource is, as you say, the entitlement to communicate, or the ‘right to ask’.
Taking a fish out of a fishery means there is one less fish there for someone else to take. That’s not the case with charity donors. A charity could ‘take’ one donor and that person is still available to be recruited by a different charity, perhaps many other charities.
Ostrom calls this ‘subtractibility of use’ and it characterizes a common pool resource. The totality of charitable giving, or the total potential of charitable giving is not a common pool resource in this sense: it’s more like a public good, such as national defence or weather forecasts (two examples used by Ostrom). CPRs have high subtractibility of use, but public goods have low subtractibillity of use.
Public goods are also ‘non-excludable’, meaning that that it’s not possible to keep out someone who hasn’t paid for the good. Someone who hasn’t paid their taxes still benefits from the army manning border checkpoints. A charity that is not a member of the PFRA can still raise money from exactly the same donors that PFRA members do, by other means.
So if donors are not the common pool resource that fundraisers need to self-regulate, what is? As Roewen points out, it’s access to those donors and maintaining the ‘right’ to ask.
The CPR for fundraisers can be viewed as a field of discrete ‘rights to ask’. Every time a fundraiser picks one of these rights to ask, it may subtract from another fundraiser’s ability to use that right, especially where self-regulation is already in force. If a charity obtains a collection permit for the high street on Saturday morning, then that right to ask on Saturday morning in the high street has been subtracted from the CPR and is not available to any other charity.
This is what PFRA does. It limits charities’ ‘rights to ask’ through agreements with councils and a diary system that allocates specific days and times when they may exercise their right (and other charities may not).
However, if fundraisers do not manage this resource responsibly, and treat the right to ask as a public good rather than a common pool resource, then people will take steps to ensure that fundraisers cannot exercise that right.
They’ll do this by registering with do not contact lists such as the Telephone Preference Service or the newly-proposed Fundraising Preferences Service. Or charities will have the right taken away from them by regulators and legislators, as the Information Commissioner’s Office recently did in the UK, and would almost certainly have happened by now regarding F2F had not the PFRA stepped in to self-regulate the right to ask on the street.
The ‘tragedy of the commons’ in fundraising would most likely not result in the waters being ‘overfished’ and the resource irrevocably depleted, but in fundraisers being prevented from taking their boats on to the water at all, so the resource goes completely untapped. Or they’ll go on to the water to find the fish have all gone somewhere else.
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Hi Ian
I am the London academic you mention in the blog.
I am sorry that I made you “peeved”.
Of course, the ‘tragedy of the commons’ concept is widely understood. My contention is that charities (or fundraisers) are not doing enough to address it. As you rightly point out in your blog, there are several possible solutions to social dilemmas. Nevertheless, charities don’t appear to have found them (not yet at least). In light of that fact, external regulation might not be such a bad idea.
Disliking street fundraisers doesn’t make me (or anyone else for that matter) a bad person (as you implied on the evening we met); it is instead a product of an evolved psychology that enjoys voluntary giving but dislikes strong-arm tactics or feeling pressured into giving. As has been discussed widely elsewhere, street fundraisers aren’t the only problematic fundraising method. There seems to be an unfortunate sentiment within the sector (which has again been flagged by others) that worthy ends justify any means necessary to achieve them. This is dangerous because it risks promoting short-term income revenue at the expense of donor satisfaction – and, therefore, giving in the longer term.
I’m not the enemy here. I agree with you on several points. Charities have to be allowed to ask for donations. But I do think the whole sector needs to work out a way to ensure that their ways of asking are not harming themselves – and other charities – in the long-term. If they can’t self-regulate from the bottom up, then it might have to come from the top down.
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Hello Nichola
I am so sorry if I gave you the impression that you are a ‘bad person’, which was certainly not my intention.
What ‘peeves’ me is that change is often imposed on fundraising (as we are currently witnessing) without using theory or evidence to make informed choices. Or fundraising can’t or will not change itself because it doesn’t have the theory or evidence to be able to make those changes.
Anyone – journalist, politician, member of the public, even an academic – is at perfect liberty to dislike anything they wish (there are types of fundraising I’m not that keen on), but personal dislike should not be used to inform or drive pubic policy about fundraising.
We are working on a new theory of ethics that seeks to balance fundraisers’ duties to their beneficiaries with their duties to their donors. I seriously doubt that many fundraisers think that their worthy ends justify ‘any’ means of raising money (most fundraisers wouldn’t deliberately lie to a donor about how their money is going to be used, for example). But the theory we are working on would provide an ethical base for establishing which means were ethically justified and when.
It simply begs the question to assert that any fundraising that makes a donor feel, say, ‘guilty’, is therefore ‘unethical’. It might be, but it might not, and it all depends on the context.
And on the subject of donor satisfaction, why don’t you take a look at our report on relationship fundraising which we have published today and actually says that charities ought to remunerate their fundraisers based on how well they make their donors feel.
You will also see if you read this report that fundraisers want to put in place long-term, donor-centred fundraising based on metrics such as donor satisfaction levels, but that boards and senior management often dictate short-term monetary targets. With the best will in the world, there is only so much donor satisfaction a fundraiser can try to achieve if her annual target has been raised and her budget has been cut. Fundraisers simply cannot make the change you call for if they are not supported in doing so by their board and management.
But this is not to lay all the blame at the foot of trustees and finance directors. It’s too simple to offload ALL the responsibility and (some) fundraisers need to change their complicity in short-term, high-volume, low-return fundraising.
So the problem facing the fundraising profession is one of culture and professional ethics, yet the solution being imposed on it is a regulatory solution, which just will not address the core issues. We’re already working on reviewing professional ethics. We also intend this year to work on the culture change, which has to start with a shift of attitudes towards fundraisers from boards and SMTs.
Whatever we come up with, though, will be based on evidence and theory, not opinion
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I will definitely read that report. Unless I am mistaken, and you’re talking about something else, it is a philosphy that several major for-profit organisations have or are trying to embrace (with mixed success); the ones that get it right seem to reap positive return on investment and enjoy higher consumer trust than their competitors (e.g. John Lewis).
I really think it is an interesting point about the mismatch between what fundraisers (generally) want to do and what charity boards of directors are asking for. As you’ve pointed out the incentives that maximise short-term targets over long-term donor satisfaction are clearly not right. It is reminiscent of trying to get a government on a 4 year term to agree to politically damaging yet environmentally friendly policies. Short-termism often wins out against the longer-term considerations. That’s why independent bodies such as the Committee for Climate Change (or the Monetary Policy Committee, who regulate interest rates so goverments can’t be tempted to fiddle) are so important for regulation where there is the temptation to prioritise short-term advantage over long-term sustainability.
Just to be absolutely clear, I am not against street fundraising because I don’t personally like it (though you’re right that I don’t enjoy the experience myself – and this isn’t how I give). I believe it is damaging to the sector because such a substantial portion of other people, when asked, also say they don’t like being approached in this manner. Phoning a text donor after they have given to ask for a larger / regular donation, or door-to-door fundraising, also have several of the hallmarks of street fundraising that people say they don’t like (which boil down into feeling pressured into giving) and that is why I am also suspicious of these as a long-term viable strategies.
As you’ve said (maybe elsewhere) I agree with you that we have to careful not to throw the baby out with the bathwater. I wonder if, for example, phoning someone up after they make a text donation to thank them for their gift and to ask if you can phone back later in the year to ask for another donation might be more palatable to many people than being thanked and then asked again in the same conversation? This ticks the box that many people (in my survey, at least) said they liked: being contacted to be informed about the appeal or to be thanked. It also allows people to say yes to giving but to push the costs of doing so into the future. From a scientific perspective (as you are no doubt aware), we might expect this to be more conducive to giving as people typically prefer to to agree to costly things in the future than to costly things right now. This is surely amenable to some sort of A/B trial with appropriate controls (perhaps it has been done already?). I’m not saying that charities have to stop asking; instead I m advocating that they (i) rigorously examine the consequences of different tactos currently used on donor satisfaction and likelihood to gift again in that context (both to them and more generally) and (ii) explore different fundraising methods and experimentally evaluate these in the same manner.
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Hi Nichola
As a F2F practitioner of over 11 years’ experience, both on the street and door, I’m extremely interested in perceptions of the method and any debate around the relative merits of a F2F approach versus, well, something else. You say that a substantial number of people don’t enjoy being approached by F2F fundraisers. I wonder if you’d be able to qualify this statement? I ask because It’d be interested to see what evidence there is to support such a claim.
In the 2014/15 PFRA Annual report, the now outgoing CEO Peter Hills-Jones spoke of his concerns around the sectors approach to evidence-based research and the danger inherent in basing regulatory decisions on what actually ‘feels right’ rather than what is – http://www.pfra.org.uk/wp-content/uploads/2015/07/2860_PFR_Annual_Report_2015_FINAL_00000002.pdf.
When we find ourselves judged by the comments section of various newspapers following a typically negative article on F2F (as referenced by MP Charlie Elphike during the PASC sessions around the time Lord Hodgson was recommending regulatory reform) do we find ourselves in the best position to make informed decisions on how to proceed? Indeed, when those in the sector we should be looking towards for leadership (Lords Shawcross and Grade for example) have chosen to comment with such disdain on our collective efforts, It’s difficult to see a way to move the debate on.
If we examine F2F itself, what demonstrable means to have to effectively judge our performance? The number of people who sign up via the method? (similar numbers over the last 7 years according to PFRA levy), the number of people who complain about it? (FRSB figures gave a 0.018% average complaint rate). I understand that F2F is not for everyone and I certainly know that people complain about the approach. I would, however, argue that ‘most’ people have no real opinion of F2F at all and rather than the method itself, it’s poor individual fundraising examples that lead to individual members of the public forming negative feelings towards F2F. I realise that the last bit is somewhat obvious but you’d be amazed at the amount of criticism F2F fundraisers can face for simply being there, rather than anything that they have said or done.
A good F2F fundraiser is a joy to speak to. We have hundreds of genuinely passionate young people engaging with members of the public on a daily basis, inspiring them to give regular donations to some of the most well-respected charitable organisations in the country. To quote Ken Burnett and Alan Clayton who I was lucky enough to spend some time with a few years ago – Hundreds of employed young people, raising hundreds of millions of pounds for charity. What’s wrong with that?
Rather than questions around the means justifying the ends, in this case, the means can be profoundly positive if done well, and I’m firmly of the believe that there’s significantly more positive experiences of F2F out there than we are given credit for. At a time when gaining donor consent for future communication has become essential, how else are we to achieve this other than with a face to face conversation? I have enjoyed Ian’s commentary and contributions to such sector debate over the last few years and applaud all efforts to bring real evidence and balance to the subject of F2F fundraising.
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